How much overtime is too much?

Archived From: Finance
  • Page :
  • 1
  • Text Only
Voting History
rated:
I searched to the best of my ability and did not find a thread on this topic.

I usually work about 15 to 20 hours of overtime a week. I recently started working about 1 weekend a month on our company's on call rotation, and on the first week that I worked a weekend I got about 40 hours of overtime (my regular 20 a week + ~10 on sunday doubletime and ~10 on saturday overtime). Much of my pay was eaten up by taxes! I know that after you make so much they start calculating taxes as if you were in the next highest tax bracket, but I'm not sure how to figure this out.

My questions are:

1) Do you think it is worth it to work overtime past the increased tax point?

2) HOW do I calculate at how many overtime hours/earnings I jump up tax brackets?

My base pay for straight time is $12.69/hour.

Member Summary
Most Recent Posts
ETFnerd said: <blockquote><hr>Dragonsnack said: <blockquote><hr>How much overtime is too much?<br><hr></blockquote>25 ho... (more)

bssc (Oct. 12, 2006 @ 11:38p) |

what does she do?

RedCelicaGT (Oct. 12, 2006 @ 11:49p) |

romantic chat?

ArbolLoco (Oct. 13, 2006 @ 12:07a) |

Quick Summary is created and edited by users like you... Add FAQ's, Links and other Relevant Information by clicking the edit button in the lower right hand corner of this message.
Thanks for visiting FatWallet.com. Join for free to remove this ad.

They tax you like you're in a higher bracket just to avoid you headaches later on. Withholding is good for some people. If you think you don't need that much withholding just file your W-4 form with your employer to lower your withholdings. You'll get more cash now, but a smaller refund come tax time. Google it if you want the specifics.

Don't work OT for quality of life issues.

Don't work OT if it will effect your health.

Don't work OT if you aren't spending enough time with your family.

Don't work OT if you aren't happy.

But taxes are a pretty lame excuse. You get taxed as if you worked at that rate all year when really you don't. If you live in the US then $13/hr is NOT putting you in a high tax bracket. You will get the vast majority of it back probably and even if you don't because it really does marginally put you in a higher tax bracket I have a hard time believing "most" of it is getting eaten up by taxes. I had an internship that taxed as if I made $50K a year which is like double your yearly wage and "most" of my money wasn't taken in taxes.

If you are young and you don't mind the work, take the OT. You'll thank yourself later when the $1 you earn today is $10 or $50 later and you can afford to spend more time with your family and/or retire, etc.

I've never understood why people think they will lose proportionately more money to tax if they work overtime.

You will get taxed the same rate if you were to keep on working the next week anyway. So if you about to earn into the next tax bracket it's only that money beyond your current bracket that get's taxed at a higher rate, not your whole income, which you were headed to anyways.

Am I missing something here?


Moneylicious said: [Q]Am I missing something here?

Nope, marginal tax brackets are beyond the comprehension of most people unfortunately.

Hypothetical:

Tax Bracket 1: <$10 is 10%
Tax Bracket 2: >$10 is 20%

You make $9.50 and *most* people will agree you owe $.95 in taxes

You make $11.00 and 95% of people will think you owe $2.20. In reality though you owe $1.20.


Thanks asdf9876. I was starting to doubt myself! <img src="i/expressions/face-icon-small-smile.gif" border=0>

I'm not trying to find an excuse to not work overtime. I understand overtime is pretty much the most effecient way to bring home extra money. I also did not say most of my money is eaten by taxes. I said much of my money was eaten by taxes on this particular paycheck. Gross was ~1200.00, net was ~900.00. $400.00, to me, is much of my pay.

And yes, I'm fairly ignorant as far as taxes go. I plan to educate myself concerning this topic, which is why I made this post.

Dragonsnack said: [Q] Gross was ~1200.00, net was ~900.00. $400.00, to me, is much of my pay.

And yes, I'm fairly ignorant as far as taxes go. I plan to educate myself concerning this topic, which is why I made this post.

Maybe you should bone up on your math skills too. <img src="i/expressions/face-icon-small-smile.gif" border=0> kidding

OT belongs to OT forum.

Sorry, typo. $300. Better? <img src="i/expressions/face-icon-small-tongue.gif" border=0>

The one reason to work overtime: Bring home more money.

That can't be more simple. Of course you'll pay more in income taxes, because you earn more money. But no matter how onerous the tax laws may be, you'll never reach a point where if you work over a certain amount of overtime, your pay will start going down. If you end up with having too much taxes withheld, because of overtime and the way withholding may be computed, you'll get that back when you file your tax return (assuming you're filing tax returns).

So if you could use some extra money, and the overtime doesn't cause something bad to happen in your life (like the stress of it all kills you, or your spouse leaves you), you might as well do some extra time.

Where I work, all overtime will do is increase my pay for that pay period, and contributions to Social Security (along with additional taxes). It doesn't increase any pension or 401(k) contributions, since those amounts are only computed on my base pay.

burgerwars said: [Q]The one reason to work overtime: Bring home more money.

Agreed, I never understood why OT was such an internal struggle for so many people. If the extra cash is worth the extra hour of your time, do it. If it is not, don't. No one values their time the same so no one can answer the question for you.


most high paying salary jobs require 50-80 hrs a week of work. Sucks working for the man, but you gotta put in hours to make the cizza$h. Sucks most when its salary pay

OP, I think you are confused by two things: taxes and withholding.

Taxes of course is the government's way of getting their money squeezed out of you. Withholding is an estimate of what the government thinks you owe them for taxes. And variable overtime throws their estimator out of whack.

Let's assume that you're paid $10/hour (easier to do the numbers than $12.69). Then time and a half OT is $15/hour and double time is $20/hour.

So your 40 hours is $400/week, or $20K/year for your base (assuming a 50 week year for simplicity). Add in 30 hours at $15/hour and ten at $20/hour, and your gross pay is $1050/week, for your rotation weekend.

The goverment withholds at a rate equivalent to you earning $1050 EVERY week (just over $52K/year), and bites you at the higher rate for that week. But when you file your taxes, the day of reckoning occurs and you will get back a chunk of the amount withheld.

Note: FWers do not like to have the government withhold extra (it's granting the government an interest-free loan), and you will get advice to reduce your withholding. But in your case, I don't know how you could possibly predict your atual earning accurately.

Edited to add: When you look at your paycheck, you see what got WITHHELD. But it is NOT the same as what you are TAXED because the government's estimate is off.

I would never pass up an honest dollar... irrespective of tax consequences.

Get PAIDfor overtime?

I didn't know that was still possible <img src="i/expressions/face-icon-small-shocked.gif" border=0>

Dragonsnack said: [Q]How much overtime is too much?25 hours/day

there is a tax thread....also, I bet this topic would be pretty easy to google...

Every hour extra you work is more money for you, bottom line, taxes taken into account.
1) Take the money and invest it wisely into saving for a house or a long term investment. Do not blow it on junk. On the other hande take a small percentage, say 5-10% and have fun with it. Its your reward.
2) Do not ever work OT, or even regular time, and miss out on family functions or other special occasions. You will regret it later in life.
3) Make sure you are not working OT when instead you could put the time to better use in expanding your education or degree/s, so that a few years down the line your salary will be much more than the OT rate you will be making now..

Tax is based on yearly income not on pay per hour.

Take the extra money, save up and pay for tuition. This way, you dont have to worry about working 60 hours a week. You'll make more working 40.

Some comments not already covered:

* Make sure your pay is not low for your line of work. $12.69/hr straight is quite a bit below the average hourly wage in this country ($16.87/hr). You could be making more money without the overtime if you find a different company or finish your degree.
* In some organizations, overtime is coveted. For example, bus drivers in some areas bid on overtime which is based upon seniority. People can change a $50k/yr job into a $100k/yr job with overtime. Not everyone who wants overtime gets it.
* This doesn't affect the OP, but the tax rate goes down 6.2% once the FICA limit ($94200 in 2006) is reached. Sometimes an extra buck is taxed less. <img src="i/expressions/face-icon-small-smile.gif" border=0>

And most importantly:
* Overtime is the best, low-risk way to make lots of extra money in a short period of time. Sometimes I don't understand why people look at eBay, balance transfer surfing, options "investing"/gambling, online gambling with poker, etc... when looking for extra cash. All of the above involve either a lot of risk or low reward or both. Instead of looking for ways to make money without working, people should be applying for jobs and moonlighting. Right now, Christmas is just around the corner so that means more jobs for moonlighters willing to do retail.

"I said much of my money was eaten by taxes on this particular paycheck."

What makes you think that? It was eaten just as much, percentage-wise, then if you had worked less hours.
It was not taxed at a higher percentage.

If you make more money you proportionately pay more taxes AND earn more money.

[QUOTE]What makes you think that?[/QUOTE]

What makes me think that is that when I calculate the average percentage of taxes taken out of my paychecks it comes out to approx. ~20% (+/- a percentile). When I calculate for this check it comes out to ~28%.

Maybe my method is fallacious. As I said, I'm fairly ignorant as far as how taxes are calculated.


I save 40% to 50% of my take home pay, maybe a little more than that. I don't plan on making this job into my career for sure. I will stay here as long as it is useful to me. They have a nice tuition reinbursment program which I plan on taking advantage of to finish my education, and then move on to greener pastures.

Dragonsnack said: [Q][QUOTE]What makes you think that?[/QUOTE]

What makes me think that is that when I calculate the average percentage of taxes taken out of my paychecks it comes out to approx. ~20% (+/1 a percentile). When I calculate for this check it comes out to ~28%.



Hmmm... I could be wrong then.
Hopefully some more knowledgeable forum members can enlighten us!

Dragonsnack said: [Q][QUOTE]What makes you think that?[/QUOTE]

What makes me think that is that when I calculate the average percentage of taxes taken out of my paychecks it comes out to approx. ~20% (+/- a percentile). When I calculate for this check it comes out to ~28%.

Maybe my method is fallacious. As I said, I'm fairly ignorant as far as how taxes are calculated.


So reread my post above. As I said there, you are confusing the amount withheld with the actuial taxes.

Thank you, Steven, I did read your post and it was helpful.

ETFnerd said: [Q]Dragonsnack said: [Q]How much overtime is too much?25 hours/dayPernicious lies. I've actually seen people bill for more than 24 hours in one day more than once. My favorite was the bill that went to the legal auditing service that was referenced in the report as "28 hours were billed on 5/14/04 by Jane Schmoe. This is impossible as there are only 24 hours in one day." No S sherlock!

ETFnerd said: [Q]Dragonsnack said: [Q]How much overtime is too much?25 hours/day
My wife gets 1 hour of pay for 4 hours on call plus 2 hours minimum per call.

So, if she takes 10 calls at 5 minutes each plus is on call for the entire day, she would bill for 26 hours.

what does she do?

romantic chat?



Disclaimer: By providing links to other sites, FatWallet.com does not guarantee, approve or endorse the information or products available at these sites, nor does a link indicate any association with or endorsement by the linked site to FatWallet.com.

Thanks for visiting FatWallet.com. Join for free to remove this ad.

TRUSTe online privacy certification

While FatWallet makes every effort to post correct information, offers are subject to change without notice.
Some exclusions may apply based upon merchant policies.
© 1999-2014